Cylinder lease or buy: Some factors to consider
Posted: Sun Oct 18, 2015 6:04 pm
It seems that every couple of weeks, there is a thread about buying or leasing welding gas cylinders. As with most forums there are as many opinions are there are people on the forum.
Much like the question which welding process is best, there is no single right answer to this question. The bottom line comes down to your bottom line. How much are you going to spend on gas and gas equipment? Factors that will influence your cost will include:
Location. Industry heavy areas can have several suppliers competing for the welding gas business. Rural or high tech areas might have one or two suppliers who have no desire to compete for your business on price.
Size of your shop. Hobbyists and one man shops often pay list price. Large shops can qualify for discounts. These discounts can lower the cost to 25% of list.
Size and type of vendor. Vendors can be as different as night and day about how they treat different customers. My gas vendor likes me to email him once a month or so with that month's order. That gives him plenty of time to combine my order with other orders to keep his costs down. My metal vendor, on the other hand, likes me to come in and chat when I place an order. We can talk for an hour as he advises me about the pros and cons for various materials for my project. Let's just say, he has a customer for life:)
I personally avoid the national and regional chains. A small welder is often a nuisance to them and to the larger shops they supply.
Individuals needs. What gases do you need? How much do you need? What is your relationship with your supplier.
The first question is how much gas do you need. This is pretty easy for large shops to figure out. But harder for someone just starting out. I suggest talking to friends who are doing work at the same scale you are doing.
Annual lease cost = ( lease rate / lease length) + (exchange cost * number of exchanges per year)
These rates vary widely based on location and discount rate. Maybe as a follow up, people can share their local rates. It works well to give all of your local vendors a call asking for quotes. Try to get the name of the person giving you the quote. Calculating your lease rate for a couple of different size cylinders.
Exchanges are pretty easy when you lease a cylinder. My local vendors have always had a cylinder on hand when I stopped in for a lease exchange. The biggest thing to look out for is being charge what you were quoted. Several times the counter guy has tacked on handling fee or charge more than they quoted. When leasing, I got in the habit of bringing a copy of my last invoice when doing an exchange. That way it was easy to tell if someone was padding the invoice.
If you are happy with the rate you are offered, go for it.
Annual owned cost = (Cylinder purchase price / 10 years) + ( refill cost * number of refills per year) I just use the length 10 years as a reasonable starting point.
My experience has been that on average it takes 2.7 years for me to recoup the initial purchase price of a cylinder. After 2.7 years the cylinder has been paid in full and I am just paying for refills.
However, exchanging user owned cylinders can be a bit more complicated. In my area, it appears nearly random how user owned cylinders are handled and how much they are charged. Get quotes in writing.
Some suppliers will say that they will not sell cylinders over a certain size. In practice this is flexible.
Some suppliers say they will not fill cylinders that are not leased through them. In practice this is flexible. Most counter people haven't even looked to see who owned the cylinder or when the inspection date expired.
Some suppliers will tell you they need to send your cylinder somewhere for inspection and refilling.... with a handling fee. In practice this is flexible.
Be prepared. Your vendor may try to dump his oldest and crappiest cylinder on you. You will need to decide if you want to pay extra to get your shiny new cylinder refilled or just get an exchange. Check the inspection date to make sure that you are going to exchange the tank before it expires.
Look out for additional fees. Every once in awhile a vendor will tack on an additional handling or certification fee.
Proof of ownership. A last issues with user owned tanks is proving ownership. As with everything else, each vendor has their own policies which they seem to enforce randomly. If you purchase a bottle, it is possible to get one with a blank neck. Other vendors stamp their name on the neck bank of their cylinders. If you have a cylinder with a blank neck it is possible to have that cylinder refilled and returned to you for a fee. Otherwise the vendor is just going to exchange your tank for one of their tanks.
In my area, it is more important to keep your paperwork handy and up to date than worry about the neck banks. I have had a vendor try to confiscate a user owned cylinder until I paid them cylinder lease fee... on a cylinder I had bought from them 6 weeks ago. Since that experience, I keep a copy of all of my original cylinder purchase information in my glove compartment.
When I switched to my current vendor, they charged a fee of $15 dollar per cylinder to exchange cylinders with the original vendors neck stamp for cylinders with their neck stamp. All things considered that seemed pretty reasonable.
I have never purchased a cylinder over craigslist. In my area, they get snapped up within minutes of going online. So, I have never dealt with proof of ownership issues with those types of tanks.
As a final thought, don't get too worked up over cylinder size or initial cost. Many vendors will charge a reasonable price to exchange a cylinder for a larger one. If that is not possible those smaller cylinders will find their uses around the shop. It is always handy to have a 40CF cylinder on hand for those remote jobs. That 125 CF cylinder you bought last year can be traded in for a helium cylinder for those jobs where you need a little extra heat. In most regions, you can get nearly what you paid when selling on craigslist... if you have the correct paperwork.
This is just my opinions based on my experiences.
Much like the question which welding process is best, there is no single right answer to this question. The bottom line comes down to your bottom line. How much are you going to spend on gas and gas equipment? Factors that will influence your cost will include:
Location. Industry heavy areas can have several suppliers competing for the welding gas business. Rural or high tech areas might have one or two suppliers who have no desire to compete for your business on price.
Size of your shop. Hobbyists and one man shops often pay list price. Large shops can qualify for discounts. These discounts can lower the cost to 25% of list.
Size and type of vendor. Vendors can be as different as night and day about how they treat different customers. My gas vendor likes me to email him once a month or so with that month's order. That gives him plenty of time to combine my order with other orders to keep his costs down. My metal vendor, on the other hand, likes me to come in and chat when I place an order. We can talk for an hour as he advises me about the pros and cons for various materials for my project. Let's just say, he has a customer for life:)
I personally avoid the national and regional chains. A small welder is often a nuisance to them and to the larger shops they supply.
Individuals needs. What gases do you need? How much do you need? What is your relationship with your supplier.
The first question is how much gas do you need. This is pretty easy for large shops to figure out. But harder for someone just starting out. I suggest talking to friends who are doing work at the same scale you are doing.
Annual lease cost = ( lease rate / lease length) + (exchange cost * number of exchanges per year)
These rates vary widely based on location and discount rate. Maybe as a follow up, people can share their local rates. It works well to give all of your local vendors a call asking for quotes. Try to get the name of the person giving you the quote. Calculating your lease rate for a couple of different size cylinders.
Exchanges are pretty easy when you lease a cylinder. My local vendors have always had a cylinder on hand when I stopped in for a lease exchange. The biggest thing to look out for is being charge what you were quoted. Several times the counter guy has tacked on handling fee or charge more than they quoted. When leasing, I got in the habit of bringing a copy of my last invoice when doing an exchange. That way it was easy to tell if someone was padding the invoice.
If you are happy with the rate you are offered, go for it.
Annual owned cost = (Cylinder purchase price / 10 years) + ( refill cost * number of refills per year) I just use the length 10 years as a reasonable starting point.
My experience has been that on average it takes 2.7 years for me to recoup the initial purchase price of a cylinder. After 2.7 years the cylinder has been paid in full and I am just paying for refills.
However, exchanging user owned cylinders can be a bit more complicated. In my area, it appears nearly random how user owned cylinders are handled and how much they are charged. Get quotes in writing.
Some suppliers will say that they will not sell cylinders over a certain size. In practice this is flexible.
Some suppliers say they will not fill cylinders that are not leased through them. In practice this is flexible. Most counter people haven't even looked to see who owned the cylinder or when the inspection date expired.
Some suppliers will tell you they need to send your cylinder somewhere for inspection and refilling.... with a handling fee. In practice this is flexible.
Be prepared. Your vendor may try to dump his oldest and crappiest cylinder on you. You will need to decide if you want to pay extra to get your shiny new cylinder refilled or just get an exchange. Check the inspection date to make sure that you are going to exchange the tank before it expires.
Look out for additional fees. Every once in awhile a vendor will tack on an additional handling or certification fee.
Proof of ownership. A last issues with user owned tanks is proving ownership. As with everything else, each vendor has their own policies which they seem to enforce randomly. If you purchase a bottle, it is possible to get one with a blank neck. Other vendors stamp their name on the neck bank of their cylinders. If you have a cylinder with a blank neck it is possible to have that cylinder refilled and returned to you for a fee. Otherwise the vendor is just going to exchange your tank for one of their tanks.
In my area, it is more important to keep your paperwork handy and up to date than worry about the neck banks. I have had a vendor try to confiscate a user owned cylinder until I paid them cylinder lease fee... on a cylinder I had bought from them 6 weeks ago. Since that experience, I keep a copy of all of my original cylinder purchase information in my glove compartment.
When I switched to my current vendor, they charged a fee of $15 dollar per cylinder to exchange cylinders with the original vendors neck stamp for cylinders with their neck stamp. All things considered that seemed pretty reasonable.
I have never purchased a cylinder over craigslist. In my area, they get snapped up within minutes of going online. So, I have never dealt with proof of ownership issues with those types of tanks.
As a final thought, don't get too worked up over cylinder size or initial cost. Many vendors will charge a reasonable price to exchange a cylinder for a larger one. If that is not possible those smaller cylinders will find their uses around the shop. It is always handy to have a 40CF cylinder on hand for those remote jobs. That 125 CF cylinder you bought last year can be traded in for a helium cylinder for those jobs where you need a little extra heat. In most regions, you can get nearly what you paid when selling on craigslist... if you have the correct paperwork.
This is just my opinions based on my experiences.